Lawmakers on the Senate Finance Committee on Tuesday accused Meta of a “violation of the spirit and, potentially, the letter of the tax law” for shaving billions of dollars off its federal tax bill using a tax credit intended to boost research and experimentation.
In a letter to Mark Zuckerberg, Meta’s chief executive, seven Democratic senators, including Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Sheldon Whitehouse of Rhode Island, asked the company about $6.6 billion worth of federal research tax credits the company has claimed over the last two years.
The letter follows a New York Times report last month that Meta has claimed to the Internal Revenue Service that the data centers it is building across the country to power its new generative A.I. efforts are “experimental.” The strategy raised concern within the company’s finance team because the credit is not supposed to be applied to supplies used in standard business operations.
Since it began applying the credit to the costs of its A.I. data centers and their expensive computer chips, Meta has become the largest claimant of the research tax credit in the United States, using it to knock off nearly $4 billion from its tax bill last year, and $2 billion the year before.
Tax experts told The Times that the credit is intended for projects that have technical uncertainties and might fail, such as the mini data center on a satellite that Google is sending to space. Meta characterizing the A.I. data centers it is building on thousands of acres across the country as experimental is “kind of wild and out there,” Andre Shevchuck, a partner at the tax advisory firm BPM, told The Times.
In the letter to Mr. Zuckerberg, the senators asked Meta for the accounting behind the company’s tax break, and how much it has claimed for the purchase of “microchips, computing equipment and other materials necessary to build or operate A.I. data centers.” The senators also inquired about a $355 million tax break the company took a decade ago on Mr. Zuckerberg’s compensation, by claiming that he was a researcher.
Meta declined to comment on the letter. Andy Stone, a company spokesman, has said that Meta has invested $200 billion in research and development over the last five years.
“Like other companies that invest at this scale, we use the tax incentives Congress established decades ago to encourage this type of domestic investment,” he said.
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